Industry experts share their optimisim with ICR in their response on the recent Union Budget 2014.
The industry has welcomed the efforts to uplift the manufacturing sector and infrastructure status in the 2014 Union Budget. The budget will address the short-term challenges for the manufacturing sector, while at the same time has made provisions for comprehensive measures to be taken in the medium to long-term as well. ICR interacted with some of the industry leaders to capture their first reactions.
Speaking about the much needed boost to the infrastructural growth, JP Chalasani, Managing Director & Group CEO, Punj Lloyd, said that, "With the governments proactive policies and announcements made in the budget to support the private sectors involvement in Indian infrastructure, the future looks promising for the EPC companies in the domestic market. Governments plans to invest significantly in the oil and gas, roads and highway, airport, harbour and port sector, will offer sufficient opportunities to players in this industry. Private Public Partnership model in awarding several projects in the infrastructure space has taken on a very forward looking approach, encouraging the private players. We are very optimistic about reviving growth in the infrastructure and manufacturing sector."
The manufacturing sector, especially companies that supply components that go into equipment used to tap renewable energy have a lot to gain as per the new budget. Reduction in excise duty on parts/raw materials used in the manufacture of wind-operated generators is a welcome step. Shishir Joshipura, Managing Director of SKF India said that, "The budget allocation for developing non-traditional energy will help reduce the dependence on coal and is an encouraging step towards energy security for us as a nation. From the industry point of view the budget promises thrust to the infrastructure development that plays a significant role in revival of the economy. The continued exemption of additional excise duty is reflective of the governments support towards the automotive industry and its growth. Opening up of foreign direct investment (FDI) in defence and railways is also a positive step towards modernisation of these sectors. This budget also has provided a strong impetus on the manufacturing sector which will contribute to the growth. The budget attempts to ensure higher purchasing power in the hands of people and has given small savings a push. Timely implementation of the policies will attract investment and will drive growth in economy."
SKF supplies specialised bearings for various industries such as those involved in automobile, wind mill and cement equipment manufacturing.
The proposed investment of Rs 5,000 crore in warehousing is an indicator of a clear focus on implementing GST by the end of this fiscal and it will provide the much needed impetus to the logistic industry. Logistics accounts for the major expense for the cement industry and a move that helps this sector will have far reaching positive impact beyond the cement industry alone. Mahendra Agarwal, Founder & CEO, Gati, commenting on the budget said that, "The Finance Minister has set the tone for an aggressive and sustained growth path by announcing a progressive Union Budget. Being the lifeline of the economy, logistic companies expected a set of reforms and thrust across related sectors of the economy and the Finance Minister didnt disappoint."
The proposed investment of Rs 37,800 crore into NHAI and state roads and a specific focus on development of select expressways in parallel to the development of industrial corridors will improve overall infrastructure, connectivity and lend efficiencies to supply chain. A commitment of Rs 500 crore for Ultra Mega Solar Power Projects and development of Green Energy Corridor Project will encourage further investments in the renewable energy sector."
Setting aside a corpus of Rs 10,000 crore of private capital to aid startup companies, promises the creation of employment opportunities that in-turn will act as a catalyst for the growth of the overall economy and improve per capita income. Allowing manufacturing units to sell their products online is a positive move for the e-Commerce businesses that can now reap the benefits that lie beyond a B2B and marketplace model."
The budget clearly has a focus on attracting investments to boost the economic growth. Focus on skill upgradation, proposals for development of industrial and economic corridors, with smart cities linked to transport connectivity, will drive Indias manufacturing sector to new levels. The budget has significant proposals for the real estate and infrastructure sector. One of such is the grant of a pass-through tax status for REIT and this would certainly lead to growth in housing sector and consequently boost cement demand in the country.